NEW YORK -- Auto dealers often dream of getting in on the ground floor of a new, unproven automotive brand, like, say, another Toyota or Hyundai.
But the reality of doing it in 2011 is a lot tougher, a panel of retail executives said here Tuesday.
“Tesla is new in the market. Fisker is new in the market. The Chinese are looking at it. But it seems like it’s been an uphill battle for a new brand with aspirations to establish itself,” observed John Casesa, senior managing director at the investment banking firm Guggenheim Securities.
The first problem? Automakers today typically require exclusive, stand-alone dealerships -- not so back in 1970.
“You can’t bring in a new brand without a store,” Sid DeBoer, CEO of Lithia Motors, told an audience at the NADA/IHS Automotive Forum. “When Toyota and Honda came into this country, you could put them into your existing stores. You can’t do that now. It’s going to be a lot harder now.”
In another challenge, start-up brands have no existing population of vehicles to generate a decent parts and service trade.
“I’m a small dealer in a small market,” said Stephen Wade, owner of Stephen Wade Auto Center in St. George, Utah, and 2011 NADA chairman. “If I don’t have the underpinnings of fixed operations, I can’t make it work.”
Robert Kurnick Jr., president of the multifranchise Penske Automotive Group, agreed. He said that while Hyundai succeeded in entering the market, it invested millions of dollars to do so.
“It’s very difficult to establish a distribution network in the United States,” Kurnick said.
But Dean Evans, chief marketing officer of the online traffic-generation company Cars.com, said that new brands today do have one advantage over their predecessors a generation ago: the Internet.
Cars.com has been working with aspiring Fiat dealers for the past six months, assisting them in getting their Web sites running in preparation for a U.S. launch.
“We’re working with digital experiences like Web sites, Facebook pages and social media,” Evans said. “Most sales chiefs today realize that you can use those low-cost tools to really drive the initial customer interest.”